Sithe/Independence Power Partners, L.P., an independent power producer (IPP), has filed a petition at the Federal Energy Regulatory Commission (FERC) alleging that Niagara Mohawk Power Corp. (NMP...
E-Sign: Messier Than Ink?
By Regina R. Johnson
What the digital signature law left unresolved could impede energy marketers' plans for widespread electronic signups.
With the insertion of an encoded card into a computer and a few strokes of the keyboard, President Clinton on June 30 electronically signed into law the Electronic Signatures in Global and National Commerce Act, or "e-sign bill." But first he scrawled his "wet signature" the old-fashioned way--a reminder that widespread acceptance and use of digital signatures still may be some years off.
Before the federal law was signed, the digital signature already was a legal substitute for its paper counterpart in more than 40 states, and energy retailers in deregulated markets have been among the first companies to build businesses around digital contracting. But according to Frank Prince, senior analyst in eBusiness infrastructures at Forrester Research Inc., such enterprises may be hindered in the short term. He predicts that implementation problems and legal challenges will limit the law's impact on business-to-consumer eCommerce for at least five years.
Experts agree that business-to-business firms have frameworks in place to reap the benefits of low-cost, high-speed electronic contracting and record keeping by 2003. But in a July report, "The Ink Won't Dry Soon on Digital Signatures," Prince, with Forrester analyst Jay Stanley, names several reasons that e-sign usage will be slow to take hold in B2C transactions:
- Confusion and legal challenges posed by the lack of a standard technology;
- Psychological barriers for consumers; and
- Implementation costs that, for some businesses, will outweigh the benefits of e-contracts.
Consumer protectionism will drive much of these cost-vs.-benefits considerations for businesses. In addition to ensuring that consumer protections aren't compromised by e-signatures, consumer advocates will "want to make sure that consumers are treated evenhandedly ... so that no undue penalties are placed on individuals that must or prefer to do things manually," says Prince.
But the E-Sign law permits companies to discriminate against customers who can't or won't go online--or even refuse to do business with them, according to Prince. "This online bias will draw cries of outrage from consumer activists--and attention from regulators and lawmakers."
These considerations, plus implementation costs and regulatory impacts, must be balanced against the potential savings and speed a business might realize through electronic contracting.
"So when a firm decides to engage in business-to-consumer electronic signatures, they have to take into account that very complex dynamic associated with the consumer environment, and what its impact on the reputation of the organization will be."
Prince estimates that once you factor in the time involved for B2C businesses to deploy the needed technology, the complexity of consumer-protection issues involved, and the likelihood that a new round of eCommerce regulations will be enacted during the next couple of years--perhaps requiring new technology--you're looking at a five-year process.
But energy companies may have an edge in staying a step ahead of regulators who grow ever more interested in customer privacy and security issues associated with the Internet.
"The Internet will be regulated and things that happen on the Internet